By Melissa Pistilli—Exclusive to Gold Investing News

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Gold prices have traded between $1130 an ounce and $1160 an ounce in New York for the past three weeks. Yet, many analysts are confident the yellow metal will break past the $1160 resistance level and GFMS Ltd. forecasts prices could reach as high as $1300 an ounce later this year.

According to a recent Reuters report, although gold futures are expected to perform well in 2010, analysts see gold equities outperforming  futures this year. “We see a 10 to 15 percent upside in the gold price but we see more like 20 to 30 percent upside in the equity names because they’re going to have an improving operating margin and we don’t think the market has fully priced that in yet,” says Bradley George, commodities and resources head at Investec Asset Management. While profits can be had playing the futures market, gold equities often offer greater returns.

Increased mergers and acquisitions (M&A) activity is expected to be a big driver of gains in gold mining shares. “M&A will probably drive the gold sector this year the same way that the gold price rises did in 2009,” says Brock Salier, analyst at Ambrian Capital.

Majors seeking to increase their reserves will turn their sights on juniors with advanced exploration and development projects. And as speculation rises over possible takeovers of particular juniors, their share prices will rise as well.

As Cameron French reported for Reuters earlier this month, for “investors eager to wring some value out of recently stagnant mining stocks . . .  getting in on a resource play ahead of an acquisition can pay big dividends.”

French lists some of the most recent juniors to see their share prices rise on possible takeover reports, including Exeter Resources [TSX:XRC] and Brett Resources [TSX.V:BBR]. Exeter’s share price rose 18 percent in nearly one week after Reuters reported that a company official had said the junior signed confidentially agreements with Barrick Gold [TSX: ABX], Newmont [TSX:NMC] and Kinross [TSX:K]. Brett Resources’ share price rose 50 percent as of April 12 after Osisko Mining [TSX: OSK] announced a C$372 million deal for BBR in March.

Major gold miners need to acquire new sources of reserves and junior exploration and development companies offer the most affordable route to bypassing the expensive and time consuming work involved in making new discoveries and advancing them towards production.

“Spurred by strong economic signals, rising metal prices and rebounding stock markets, established miners have come out in force to snap up assets needed to ensure their future production,” asserts French.

But major’s like Barrick and Kinross won’t be salivating over just any junior gold company. Juniors that make good takeover targets are those companies that hold deposits with defined resources, are carrying little to no debt, have experienced management, and are in close proximity to major producing projects.

Coral Gold—Barrick Buyout Candidate?

This week, Pinnacle Digest named Canadian-based Coral Gold Resources [TSX.V:CLH] as its new Featured Gold Company of 2010. The investment publication based its decision on Coral’s partnership with Barrick and the close proximity of the junior’s Robertson Gold Project to the world’s largest gold producer’s Pipeline Gold Mine in the historic Cortez Gold Trend region in Nevada.

“The proximity and infrastructure related to being this close to a world famous mine gives our new Featured Gold Company a distinct advantage over many juniors hoping for a shot at production or a potential future buyout,” says Pinnacle. “With 3.4 million ounces of gold, and a market cap of less than $20 million, we are not selecting this company because of what they might achieve, but because of what they already have.”

Coral announced this week that it has closed a second tranche of a private placement, which generated gross proceeds of $965, 250 from the sale of 1,755,000 units at a price of $0.55 per unit. Combined with the first closing (7,000,120 units issued), the proceeds total $3,849,999.90 and the company plans to use some of the funds to further advance the Robertson Gold Project.

With help from Assistant Editor Vivien Diniz

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